How to Claim Home Based Business Tax Deductions

Member

By Cheryl Heppard
User-Submitted Article

Article Rating:

(5 Ratings)

Home Based Business Tax Deductions

Home based business tax deductions are plentiful and it's important to be aware of them for home business tax savings. If you have a small at home enterprise, there are many deductions you can claim to reduce your overall tax bill. Maximizing your expenses is key to reducing your overall tax bill. There are many expenses incurred with having a home business which all should be accounted for when claiming deductions for your home business.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

receipts
credit card statements
bank records

Step 1

home based business tax deductions

Your phone bill can be deducted if you use it for business. You can't claim all of the expense, only the phone calls made for business. You can deduct it if you have a second line which is used solely for business related calls.
Step 2

You cell phone bill can be deducted as well if you make business calls, but you can't claim the whole bill if you also use it for personal calls. Pro-rate the business calls and deduct that percentage from your taxes.
Step 3

Your internet connection fees can be deducted for business if you use the internet to conduct business.
Step 4

If you have an office in your home which is used only for your business, meeting clients, and general work related activities, you can claim your it as an in home office. This allows you to pro-rate and deduct portions of your rent, interest on your mortgage, utilities, maintenance fees, insurance, property taxes, etc. You also can claim a deduction for any furniture such as desks and filing cabinets, and equipment such as copiers, fax machines, etc.
Step 5

Equipment and furniture you purchased in 2008 can be claimed as an expense or depreciated up to 50% by business owners under a new depreciation deduction provision in home business tax breaks laws.
Step 6

Business insurance such as malpratice insurance, errors and ommissions, liability, workers compensation, etc all can be claimed as a 100% deduction.
Step 7

classes are tax deductions

Any traveling you did for your business can be claimed as a deduction. Travel expenses can be 100% deducted, while meals you had while traveling can be claimed at 50%. Travel expenses include hotel bills and transportation.
Step 8

driving clients qualifies for tax deduction

If you attended any business classes, seminars, training, or conferences, the registration costs and transportation can be claimed as a tax deduction. Any materials you purchased such as DVD's, trade magazines, and books also can be deducted.
Step 9

Your vehicle can be used for tax deductions for either milege or a percentage of total vehicle expenses. Figure out the deduction each way and take the higher tax deduction.
Step 10

Any interest fees on your business credit cards or loans can be claimed as a deduction. If you use a personal card, pro-rate the business costs. All business expenses can be claimed 100%.
Step 11

deduct 50% of meals

Any meals, entertainment or gifts which were business related can be claimed as a business tax deduction. Meals can be claimed at 50%, gifts up to $25 per person can be claimed at 100%.
Step 12

Home based business tax deductions are important to maximize in order to realize all the home business tax savings. When doing your taxes, utilize online tax courses, use small business tax software, or hire a good accountant.